AMD’s Rally Should Continue Getting Stronger

AMD (AMD) has been through lots of severe problems throughout the last few years as its revenue growth has followed a downward trajectory. However, the company has performed better than expected this year under the leadership of new CEO Lisa Su. The company’s launch of its new Polaris architecture has been very successful and it has been the primary reason behind AMD’s recent success.

As a result, shares of AMD have shot up more than 300% in the last few months and there are many reasons why I think AMD’s rally may sustain a bit longer.

In the past ten years, AMD’s peers like Intel and NVIDIA (NVDA) have enjoyed great success.

Intel’s (INTC) yearly revenue has surged 43 percent and NVIDIA’s revenue has more than doubled in the reference time period. On the contrary, AMD has been a very weak performer in the meantime.

However, conditions are changing substantially as AMD has realized that confronting NVIDIA as well as Intel head-on was pointless, as both the companies had better cash flows and greater R&D and marketing budgets. Therefore, AMD has strategized to place its focus on certain niche markets which its opponents had ignored.

On the other hand, AMD’s impending Zen CPUs are projected to enhance its competitive position comparative to Intel. The first PC models should begin shipping toward the end of 2016, with substantial volume expected next year. It is highly likely that the server market may signify an even superior opportunity for the company, keeping in mind that Intel presently relishes a strong domination.

At present, if anyone wants to use high-end VR devices, then it is mandatory to have a PC that comprises powerful GPU. And there are currently only two major companies that have designed graphics cards which are compatible with virtual reality. This provides prospect to evolve its graphics business significantly in the near future and beyond.

The company’s Radeon RX 480 has perceived legitimately robust reviews since it was available for purchase in the market last month. RX 480 is capable of powering existing virtual reality headsets and is priced at just $199. This will certainly help the company to reap huge profit in the approaching quarters.

Conclusion

AMD has been a terrific performer this year and, as mentioned above, its rally can still continue. AMD’s looks like a completely different company under the leadership of new CEO and should continue taking strides in the right direction.